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Finance options when looking at Franchise Business

Guest post by: Nick Strong

Article Overview: If you're trying to get financing for the start up of a franchise business, there are many methods to explore. We look at some of the options available.

Finance options when looking at Franchise Business

In your search for a franchise opportunity, you will reach a point where you have to consider how much you can actually afford to invest. Franchises generally come with a set price or franchise fee; this fee usually includes things like learning how to run the franchise, initial trainings needed to open and support after the fact, merchandise you may need to start, and the permission to use the franchise brand name.

If you're trying to get financing for the start up of a franchise business, there are many methods to explore.

If you've been saving up for a new business, you could use that money to cover the franchise fee.

If you have recently been made redundant, its possible that you have come away with a lump of capital that could be used to invest into a new venture. Putting this money into a new franchise business could be viewed as a long term investment which could see a return as the new business matures.

Perhaps you have a friend or relative from whom you can borrow to invest in your business venture. One other thing you might want to consider is establishing a business relationship with someone you don’t know. Such individuals are known as venture capitalists, and they commonly invest sums of money into new ventures in order to see a good return on those investments. Venture capitalists sometimes take an active role in management or just keep quiet and wait for the profits.

You can sometimes fund smaller franchise businesses with just a loan, a credit card or some small savings. Depending on the conditions of your loan or credit, you then have a while to make repayments.

Leading high street banks usually have departments that specialize in financing for a franchise startup. Your application may have a better chance if you find a bank that has a pattern of lending to franchises like yours. The finance will usually be repaid to the bank over a period of time.

Regardless of the option you pick, you should seriously consider the financing options for your franchise early in the decision making process. This will help to narrow your options, when considering the range of franchise opportunities available, and ensure you don't waste your time looking at business opportunities that are outside of your scope.

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Article Tags: franchise, franchise business, franchise finance, franchise opportunities



Related Forum Posts
Re: Finance is the primary requirement of business - [quote="rauljoseph":36x8dadn]Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.[/quote:36x8dadn] Good point. I'll just add that if I was going into business for myself and could only have one skill it would be Sales & Marketing. You need to be able to create customers first and foremost. Finance is more of a support function for entrepreneurs.
Finance is the primary requirement of business - Finance is very important in a business. It is all about managing the business' money and other assets. Finance includes the study and analysis of processes, financial institutions, markets and instruments that are involved in the transfer of money or anything that has a monetary value among consumers, businesses and government.
Re: Enticing Franchises - Top 9 List - All Franchise listed above are in millions of dollars. Do you have the list of Franchise in thousands
Re: Info for would be franchisers... - [quote="Sebastien":1d29sdv1]Like Franchise Times, Franchise Update is a very practical magazine. There is no blah blah, just straight facts that anyone in the franchise community can relate to. I just want to mention that all these magazines are NOT franchisee oriented. I mean these magazines are for franchise professionals. If you're looking to buy a franchise, you won't find much information in there. To answer your question, getting published in Franchise Times was fairly easy. I don't want to brag too much but I think I am known in the franchise industry. I was the marketing guy at Franchise.com for a few years before joining my new company, the World Franchising Network. So people know me and I have a very good relationship with Nancy Weingartner, the Managing Editor at Franchise Times. I was talking with her at the last Franchise Expo South in Miami and she mentioned she'd like me to be profiled. I was like "ok, sure!". I like this franchise executive profile thing in Franchise Times as it is rarely BS. People are usually really natural in there.[/quote:1d29sdv1] Thanks for the follow up Sebastien! And I can't say that I'm surprised that networking with the right people and managing your relationships with them properly are the keys to being published. I guess the old adage holds true of "it's not who you know, but who knows you" that's important.
how much for a franchise fee? - Dear Colleague There is no easy answer to this question. Things to consider: [list=] The sizeof the Franchise Clent base Expected Turnover Intellectual Property costs (recoup) Number of Franchises Number of employees Original Set up costs Franchise admin costs An example: A franchise that I was involved in setting was to a simple "lawn mowing/home repair" franchise. The Franchise included national/local advertising - preparation of client lists - general admin - central accounting etc The Franchise involved 300-500 clients - and an annual turnover of about $300,000 . The annual franchise fee was $30,000. Hope that this gives you some idea Take care Ian[/list]


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